Harrison Memorial Library Financial Statements Fy Ended 2012

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HARRISON MEMORIAL LIBRARY

BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2012



Harrison Memorial LibraryBasic Financial Statements

For the year ended June 30, 2012

Table of Contents

Page(s)

FINANCIAL SECTION

Independent Auditor’s Report ........................................................................................................... 1-2

Management’s Discussion and Analysis ........................................................................................... 3-9

Basic Financial Statements:

Governmental Funds Balance Sheet/Statement of Net Assets ...................................................... 12

Statement of Governmental Fund Revenues, Expenditures and

Changes in Fund Balances/Statement of Activities ................................................................. 13

Notes to Basic Financial Statements ........................................................................................ 15-22

Required Supplementary Information ................................................................................................. 25

Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial StatementsPerformed in Accordance With Government Auditing Standards ................................................ 27



INDEPENDENT AUDITOR’S REPORT

To the Board of Trustees of theHarrison Memorial Library

Carmel-by-the-Sea, California

We have audited the accompanying basic financial statements of the Harrison Memorial Library (“the

Library”), as of and for the year ended June 30, 2012, as listed in the foregoing table of contents.

These basic financial statements are the responsibility of the Library's management. Our responsibilityis to express an opinion on these basic financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United Statesof America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements are

free of material misstatement. An audit includes consideration of internal control over financialreporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the Library’s internal control over

financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a

test basis, evidence supporting the amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the basic financial statements referred to above present fairly, in all material respects, thefinancial position of the Library as of June 30, 2012, and the results of its operations for the year then

ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated February 25,2013 on our consideration of the Library’s internal control over financial reporting and on our tests of

its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on

internal control over financial reporting or on compliance. That report is an integral part of an audit

performed in accordance with Government Auditing Standards and should be considered in assessingthe results of our audit.



To the Board of Trustees of the

Harrison Memorial Library

Carmel-by-the-Sea, CaliforniaPage 2

Accounting principles generally accepted in the United States of America require that themanagement’s discussion and analysis and budgetary comparison information on pages 3–9 and 25 be

presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who

considers it to be an essential part of financial reporting for placing the basic financial statements in an

appropriate operational, economic, or historical context. We have applied certain limited procedures to

the required supplementary information in accordance with auditing standards generally accepted inthe United States of America, which consisted of inquiries of management about the methods of

preparing the information and comparing the information for consistency with management’s

responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the

information because the limited procedures do not provide us with sufficient evidence to express anopinion or provide any assurance.

]]TVcT? \ÇvAFebruary 25, 2013 JJACPA, Inc.



Harrison Memorial LibraryManagement’s Discussion and Analysis


3

Management’s Discussion and Analysis

This section of the Harrison Memorial Library’s (the Library) basic financial statements presentsmanagement’s discussion and analysis of the Library’s financial performance during the fiscal year ended June 30, 2012. Since this management’s discussion and analysis is designed to focus on currentactivities, resulting change, and current known facts, please read it in conjunction with the Library’s basic financial statements (pages 12 and 13) as well as the footnotes to the financial statements(pages 15 - 22).

Financial Highlights

At June 30, 2012, net assets ended the year at $520,616.

Using This Report

In June 1999, the Governmental Accounting Standards Board (GASB) released Statement No. 34, Basic Financial Statements -- and Management’s Discussion and Analysis -- for State and Local

Governments. Changes in Statement No. 34 require a comprehensive one-line look at the entity as awhole and capitalization of assets and depreciation. The major reconciling items necessary werecapitalization and depreciation of capital assets and inclusion of long-term liabilities. The Library hasselected the single governmental fund (General Fund) presentation since this reflects the most conciseand easily readable presentation for the Library’s operations.

The annual financial statements include the Independent Auditor’s Report, this management’s discussionand analysis, the basic financial statements, and notes to basic financial statements and required

supplementary information.



Harrison Memorial LibraryManagement’s Discussion and Analysis, Continued


4

Financial Analysis of the Library as a Whole

Increase Percent

2012 2011 (Decrease) Change

Assets:

Current Assets 522,940$ 470,639$ 52,301$ 11%

Non-Current assets - - 0%

Total Assets 522,940 470,639 52,301 11%

Liabilities

Current Liabilities 2,324 - 2,324 100%

Total Liabilities 2,324 - 2,324 100%

Net Assets

Restricted 46,852 46,852 - 0%

Unrestricted 473,764 423,787 49,977 12%

Total Net Assets 520,616 470,639 49,977 11%

Total Liabilities and net assets 522,940$ 470,639$ 52,301$ 11%

Net Assets

As of June 30, 2012 and 2011

This schedule is prepared from the Library’s Statement of Net Assets, which is presented on an accrual basis

of accounting whereby assets are capitalized and depreciated.

Net assets at June 30, 2012, of $520,616, consisted primarily of amounts available for operations.





5

Financial Analysis of the Library as a Whole, Continued

Increase Percent


Operating expenses: 1,170,363$ 1,339,542$ (169,179)$ -13%

Program revenue:

Contributions 1,188,843 1,338,732 (149,889) -11%

Grants 10,764 16,106 (5,342) -33%

Charges for services 19,154 24,064 (4,910) -20%

Total Program Revenue 1,218,761 1,378,902 (160,141) -12%

Net operating expenses (48,398) (39,360) (9,038) 23%

General revenue:

Interest 1,579 2,090 (511) -24%

Total general revenue 1,579 2,090 (511) -24%

Increase in net assets 49,977 41,450 8,527 21%

Net assets:

Beginning of year 470,639 429,189 41,450 0%

End of year 520,616$ 470,639$ 49,977$ 11%

For the year ended June 30, 2012 and 2011

Operating Results

In fiscal 2012, program revenues were primarily from contributions, which consisted of $1,218,761. Generalrevenues were primarily of contributions from the City and the Foundation as well as CLSA grants.

The following is a graphic illustration of revenues by source for the year ended June 30, 2012:

Contributions

1,188,843 97% Grants 10,764

1%

Charges for

services19,154 2%

Interest 1,579

0%

Revenues by Source





6


Increase Percent

2012 2011 Decrease Change

Operating expense:

Library Administration 46,261$ 50,632$ (4,371)$ -9%

Documents and books 161,836 184,089 (22,253) -12%

Equipment 22,993 16,830 6,163 37%

Cataloging and programs 20,027 21,537 (1,510) -7%

Information technology systems 32,733 54,222 (21,489) -40%

City staffing agreement 886,513 996,482 (109,969) -11%

Capital outlay- projects - 15,750 (15,750) 100%

Total operating expenses 1,170,363$ 1,339,542$ (169,179)$ -13%

Operating Expenses

For the year ended June 30, 2012 and 2011

Operating expenses in the amount of $1,170,363 were split amongst three major categories; city staffingagreement, documents and books, and administration and operations.

The following is a graphic illustration of operating expenses for the year ended June 30, 2012:

Administration and

operations 46,261

4.0%

Documents and books

161,836 13.8%

Equipment 22,993

2.0%

Cataloging and programs 20,027

1.7%

Information

technology systems

32,733 2.8%

City staffing

agreement 886,513

75.7%

OPERATING EXPENSES





7


Increase Percent


Net Assets

Restricted 46,852$ 46,852$ -$ 0%

Unrestricted 473,764 423,787 49,977 12%

Total 520,616$ 470,639$ 49,977$ 11%

Analysis of Net As se ts

As of June, 2012 and 2011

The change in net assets of $49,977 is primarily due to program revenues exceeding program expenses for theyear.

The following is a graphic illustration of net assets for June 30, 2012:

Restricted, 46,852

, 9%

Unrestricted,

473,764 , 91%

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

In considering the Library’s Budget for fiscal year 2012-2013, the Board of Trustees and management used

the following criteria:The key assumptions in our revenue forecast were:

1. Interest earnings should be approximately the same.2. Program revenues are expected to be approximately the same.

Continuing items specifically addressed in the budget were:

Concern over economic budget reductions from contributors, especially in the Foundationcategory, and avoiding further excesses of service costs over revenues.





8

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES, Continued

The adopted budget for the new fiscal year of 2012-2013 was $320,000 and is summarized as follows:

Percentage

FY 2012-13 FY 2011-12 Change

Administration

Telephone 8,890$ 10,300$ -14%

Contracted services 20,700 23,740 -13%

Professional Development 15,187 9,434 61%

Supplies 9,200 9,000 2%

Postage 1,500 3,000 -50%

Facilities Maintenance 500 500 0%

Donor Acknowledgement 950 1,250 -24%

Bank charges 300 250 20%

Documents 200 250 -20%

Contingency 250 - 100%

Total Adminis tration 57,677 57,724 -0.08%

Documents and books

Main collection 99,834 97,929 2%

Reference collection 41,000 44,841 -9%

Youth Services collection 18,845 17,299 9%

Local History collection 4,000 4,000 0%

Professional collection 300 300 0%

Serials 12,000 9,000 33%Total Documents and books 175,979 173,369 2%

Equipment

Maintenance 15,200 15,000 1%

Other professional services 400 1,200 -67%Small tools and equipment 3,787 24,677 -85%

Capital outlay >$5,000 - - 0%Total Equipment 19,387 40,877 -53%

Information technology systems

Small tools and equipment 15,500 16,900 -8%

Support and maintenance 21,312 29,685 -28%

Telecommunications 2,700 2,000 35%

Software 500 500 0%

Website maintenance/enhancement 1,400 2,000 -30%

Capital outlay >$5,000 - - 0%Total Equipment 41,412 51,085 -19%

Cataloging and programs

Material processing 9,345 9,345 0%Library cards 1,500 - 100%

Local History programs 250 700 -64%

Youth Reading programs 5,000 4,500 11%

YS Summer Reading program 5,000 4,500 11%

Teen programs 1,200 - 100%

Adult programs 3,000 4,350 -31%

Contingency 250 - 100%

Total Cataloging and programs 25,545 23,395 9%

Total Budget 320,000$ 346,450$ -8%





9

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES, Continued

1. Administration - Shows a combined decrease of approximately <1%, which is due to anticipatedoperating cost decreases.

2. Documents and books – Show a combined increase of approximately 2% due to an increase in servicecosts.

3. Equipment - Shows a combined decrease of approximately 53% due to a reduction in the need for newequipment.

4. Information technology systems - Show a combined decrease of approximately 19% due to a reductionin the need for new equipment or enhancements to website.

5. Cataloging and programs - Show a combined increase of approximately 9% due to an increase in program related costs.

The following is a graphic illustration of appropriations for 2012-13:

Administration57,677 18.0%

Documents and books 175,979

55.0%

Equipment19,387 6.1%

Informationtechnology

systems 41,41212.9%

Cataloging and programs 25,545

8.0%

Budgeted Expenditures

Contacting the Library

This financial report is designed to provide our customers and creditors a general overview of the Library’sfinances and to demonstrate the Library’s accountability for the money it receives and is allocated to it. If youhave questions about this report, contact the Harrison Memorial Library, P.O. Box 800Carmel, CA 93921, telephone number (831) 624-1366.



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10



BASIC FINANCIAL STATEMENTS

11




Governmental Funds Balance Sheet/Statement of Net Assets

June 30, 2012

Governmental Adjustments Statement of

Funds (Note 9) Net Assets 2011ASSETS

Current

Cash and investments:

Available for operations 476,193$ -$ 476,193$ 423,892$

Restricted for endowment 46,747 - 46,747 46,747

Interest receivable - - - -

Prepaid items - - - -

Total current assets 522,940 - 522,940 470,639

Noncurrent

Capital assets, net of

accumulated depreciation - - - -

Total assets 522,940$ -$ 522,940$ 470,639$

LIABILITIES AND FUND BALANCES

Liabilities:

Current

Accounts payable and accrued liabilities 2,324$ -$ 2,324$ -$

Total current liabilities 2,324 - 2,324 -

Total liabilities 2,324 - 2,324 -

Fund balances/Net assets:

Nonspendable:

Reuel Bradney Book Fund Endowment 46,747 (46,747) - -

Restricted:

Reuel Bradney Book Fund Endowment -

investment earnings 105 (105) -

Unassigned, reported in:

General fund 473,764 (473,764) - -

Total fund balances 520,616 (520,616) - -

Total liabilities and fund balances 522,940$

NET ASSETS

Invested in capital assets, net

of related debt - - -

Restricted 46,852 46,852 46,852Unrestricted 473,764 473,764 423,787

Total net assets 520,616$ 520,616 470,639

Total liabilities and net assets 522,940$ 470,639$

The accompanying notes are an integral part of these basic financial statements

12




Statement of Governmental Fund Revenues, Expenditures, and

Changes in Fund Balances/Statement of Activities


Governmental Adjustments Statement

Funds (Note 10) of Activities 2011

EXPENDITURES/EXPENSES:

Administration and operations 46,261$ -$ 46,261$ 50,632$

Documents and books 161,836 - 161,836 184,089

Equipment 22,993 - 22,993 16,830

Cataloging and programs 20,027 - 20,027 21,537

Information technology systems 32,733 - 32,733 54,222

City staffing agreement 886,513 - 886,513 996,482

Capital outlay - projects - - - 15,750

Total expenditures/expenses 1,170,363 - 1,170,363 1,339,542

REVENUES:

Program revenues:

Contributions:

Carmel Public Library Foundation 280,000 - 280,000 345,000

Friends of Harrison Memorial Library 20,200 - 20,200 22,000

Individuals/businesses 2,130 - 2,130 2,250

City of Carmel 886,513 - 886,513 969,482

California State Library 10,764 - 10,764 16,106

Charges for services 19,154 - 19,154 24,064

Total program revenues 1,218,761 - 1,218,761 1,378,902

Net program expense (48,398) - (48,398) (39,360)

General revenues:

Interest 1,579 - 1,579 2,090

Reimbursements - - - -

Total general revenues 1,579 - 1,579 2,090

REVENUES OVER (UNDER)

EXPENDITURES 49,977

CHANGE IN NET ASSETS - 49,977 41,450

FUND BALANCES/NET ASSETS:

Beginning of the year 470,639 - 470,639 429,189

End of the year 520,616$ -$ 520,616$ 470,639$

The accompanying notes are an integral part of these basic financial statements

13



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14



Harrison Memorial LibraryNotes to Basic Financial Statements


15

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Harrison Memorial Library (“the Library”) is a component unit of the City of Carmel-by-the- Sea

(City) established and opened in 1928 its Main Library building and expanded services by adding itsPark Branch facility in 1989 by City Ordinance pursuant to statutory authority provided by theCalifornia Education Code, which has the powers necessary to establish, improve and extend libraryservices to the Carmel area. The Main Library building was designed by renowned California architectBernard Maybeck and financed by a bequest from Ella Reid Harrison as a memorial to her husband,California Supreme Court Justice Ralph Chandler Harrison.

The Library is governed by a Board of Trustees appointed by the Carmel City Council. Oversightresponsibility, the ability to conduct independent financial affairs, issue debt instruments, approve budgets, and otherwise influence operations and account for fiscal matters is exercised by the Library'sBoard of Trustees. The Library is a separate reporting entity for financial reporting purposes and the

accompanying basic financial statements reflect the assets, liabilities, fund balances/net assets,revenues, and expenditures/expenses of the Library only and are reported in the City’s financialstatements as a “blended” component unit. Blended component units, although legally separateentities, are, in substance, part of the government’s operations and so data from these units arecombined with data of the primary government, which for the Library would be the City.

The financial statements of the Library have been prepared in conformity with accounting principlesgenerally accepted in the United States of America (GAAP). The Governmental Accounting StandardsBoard (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies:

In June 1999, the GASB released Statement No. 34, Basic Financial Statements – and Management’s

Discussion and Analysis – for State and Local Governments. the Library has selected the singlegovernmental fund (General Fund) presentation since this reflects the most concise and easily readable presentation for the Library’s operations.

A. Reporting Entity

As defined by GASB Statement No.39, The Financial Reporting Entity, the Library is not financiallyaccountable for any other entity other than itself, nor are there any other entities for which the natureand significance of their relationship with the Library are such that exclusion would cause theLibrary’s financial statements to be misleading or incomplete.

B. Basis of Accounting

The fund-based financial statement columns (Governmental Funds column) on Pages 12 and 13 areaccounted for using the modified accrual basis of accounting and reflect balances for the Library’sGeneral Fund and Endowment Permanent Fund. These funds revenues are recognized when they becomemeasurable and available as net current assets. Measurable means the amount of the transaction can bedetermined and available means the amount is collectible within the current period or soon enoughthereafter (generally sixty days) to be used to pay liabilities of the current period. Amounts, which could not be measured or were not available, were not accrued as revenue in the current fiscal year. TheStatements of Net Assets and Activities columns on Pages 12 and 13 have been prepared on theaccrual basis of accounting whereby all revenues are recorded when earned and all expenses arerecorded when they have been reduced to a legal or contractual obligation to pay.



Harrison Memorial LibraryNotes to Basic Financial Statements, Continued


16

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,

Continued

C. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted inthe United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures/expenses during the reporting period. Actual results could differ from thoseestimates.

D. Budgets

Budgets are prepared on the modified accrual basis of accounting, in which capital assets acquired arerecorded as expenditures and depreciation is not recorded.

The Library follows these procedures in establishing the budgetary data reflected in the financialstatements:

By June 30, the Board of Trustees reviews a proposed operating budget for the year commencing July 1. The operating budget includes proposed expenditures and the meansof financing them.

The budget is legally enacted through passage of a motion during a Board of Trusteesmeeting prior to year-end.

The Library Director reviews all budget transfers and revisions, which are then approved by the Board of Trustees.

Formal budgeting is employed as a management control device during the year for the both funds.

Budgets for the General and Endowment Permanent Funds are adopted on a basisconsistent with accounting principles generally accepted in the United States of America.

The legal level of a budgetary control, the amount to which budget should not be exceeded, is the programlevel.

Budgeted amounts are as originally adopted or as amended by the Board of Trustees. Individualamendments were not material in relation to the original appropriations.





17

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,

Continued

E. Cash and Investments

The Library pools cash and investments from all funds for the purpose of increasing income throughinvestment activities. Highly liquid money market investments with maturities of one year or less at timeof purchase are stated at amortized cost. All other investments are stated at fair value in accordance withGASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External

Investment Pools. Market value is used as fair value for those securities for which market quotations arereadily available.

The Library participates in an investment pool managed by the State of California titled Local AgencyInvestment Fund (LAIF) which has invested a portion of the pool funds in Structured Notes and Asset-

Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of theState of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to changes in interest rates.

F. Capital Assets

Capital assets are carried at cost or estimated cost if actual cost was not available. Donated assets arevalued at their estimated fair value on the date donated.

Depreciation is calculated on a straight line basis using the following useful life schedule:

Furniture and fixtures 5 to 10 yearsAutomobiles 5 years

Office equipment 5 to 10 years

Computer equipment 5 to 10 years

2. CASH AND INVESTMENTS

The Library had the following cash and investments at June 30, 2012:FDIC/

SIPC insured Not rated Fair Value

Local Agency Investment Fund (LAIF) 522,710$ 522,710$

Petty cash 230 230

Total -$ 522,940$ 522,940$





18

2. CASH AND INVESTMENTS, Continued

A. Cash Deposits

The Library pools cash from all sources. The Library invests excess cash in LAIF. The Librarymaintains a petty cash fund of $230.

The California Government Code requires California banks and savings and loan associations to securegovernment cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to thoseof a general creditor. Thus, collateral is considered to be held in the government’s name.

According to California law, the market value of pledged securities with banking institutions mustequal at least 110% of the government’s cash deposits. California law also allows institutions to secure

government deposits by pledging first trust deed mortgage notes having a value of 150% of thegovernment’s total cash deposits. The government can waive collateral requirements for cash deposits,which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation.

B. Investments

The Library is authorized by State statutes and Governing Board action to invest in the following:

United States Treasury notes, bonds, bills or certificates of indebtedness.

Registered state warrants or treasury notes or bonds of the State of California.

Bonds, notes, warrants or other evidences of indebtedness of any local agency within theState of California.

Obligations issued by banks and guaranteed by federal agency or United Statesgovernment-sponsored enterprise.

Negotiable certificates of deposit or time deposits placed with commercial banks and/or savings and loan companies.

Banker's acceptances.

Commercial paper.

California Local Agency Investment Fund (LAIF)

The Library invests in LAIF, an unrated pool, which limits the exposure of Library funds to interestrate and credit risk by treating all balances as current.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain

Investments and for External Investment Pools, investments were stated at fair value using theaggregate method, which includes any adjustments recorded in interest/investment income.





19

2. CASH AND INVESTMENTS, Continued

Investment in LAIF: LAIF is stated at amortized cost, which approximates fair value. The LAIF is aspecial fund of the California State Treasury through which local governments may pool investments.The total fair value amount invested by all public agencies in LAIF is $66,515,727,874 of which theLibrary had a balance of $522,710, which approximated market value and was managed by the StateTreasurer. Of the total invested, 99.24% was invested in non-derivative financial products and 0.76%in structured notes and asset-backed securities. The Local Investment Advisory Board (Board) hasoversight responsibility for LAIF. The Board consists of five members as designated by State Statute.The fair value of the Library’s investment in this pool is reported in the accompanying financialstatements at amounts based upon the Library’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on anamortized cost basis.

3. RELATED PARTY TRANSACTIONS

The Library operates under the terms of a 2008 Memorandum of Understanding under which the City pays for all library personnel costs and the operating and capital improvement costs of the two library buildings. These amounts were reported as City staffing agreement expenses and City buildingexpenses in the Statement of Activities along with the offsetting City contribution amount in programrevenues.

4. FUND BALANCES/NET ASSETS

Fund Balances consist of the following: Nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance consists of investments that will not convert to cash soon enough to affect thecurrent period. Restricted fund balance consists of resources that are subject to externally enforceablelegal restrictions imposed by parties altogether outside the government. Committed fund balance consistsof amounts that can only be used for specific purposes pursuant to constraints imposed by a formal actionof the Library’s highest level of decision-making authority. Assigned fund balance consists of amountswhere intent is expressed by the governing body itself or a body or official to which the governing bodyhas delegated the authority to assign amounts to be used for specific purposes. Unassigned amountsrepresent deficits in fund balance as reflected by the necessity to show nonspendable and restricted balances in an amount greater than total fund balance. Currently, the Library uses only the nonspendable,restricted and unassigned categories.

Nonspendable 46,747

Restricted 105

Unassigned 473,764

520,616$





20

4. FUND BALANCES/NET ASSETS, Continued

Net assets consist of restricted and unrestricted amounts. Restricted amounts reflect balances whichcannot be influenced by the Library Board of Trustee’s action, such as the investment in capital assetsnet of any related debt or an endowment. Unrestricted amounts reflect balances available for currentoperations.

Net Assets

Restricted 46,852$

Unrestricted 473,764

Total 520,616$

5. INSURANCE

The Library is covered for risk of loss through the City insurance programs, which are premium based insurance policies for general liability, property and worker’s compensation.





21

6. EXPLANATION OF DIFFERENCES BETWEEN GOVERNMENTAL FUND BALANCE

SHEETS AND THE STATEMENTS OF NET ASSETS

“Total fund balances” of the Library’s Governmental funds of $520,616 remained the same as “netassets” of governmental activities reported in the Statement of Net Assets because a difference would result primarily from the long-term economic focus of the statement of net assets versus the currentfinancial resources focus of the Governmental funds balance sheets. The effect of the difference isillustrated below:

General Statement of

Fund Eliminations

1

Net Asse tsAssets:

Cash and investments 522,940$ 522,940$

Total ass ets 522,940$ 522,940$

Liabilities

Accounts payable 2,324$ 2,324$

Total Liabilities 2,324 2,324

Fund Balances /Net Ass ets

Total Fund balances/net assets 520,616 520,616

Total liabilities and fundbalances /net asse ts 522,940$ 522,940$-$

-$

-$

-

Balance Sheet/Statement of Net Assets

Reclassifications

and

-$

1When capital assets (land, buildings, equipment) that are to be used in governmental activities are

purchased or constructed, the costs of those assets are reported in expenditures in governmental funds.However, the statement of net assets includes these capital assets among the assets of the Library as awhole. Long-term liabilities such as compensated absences are not due and payable in the current period and therefore they are not reported in the government’s fund balance sheet.





22

7. EXPLANATION OF DIFFERENCES BETWEEN GOVERNMENTAL FUND

OPERATING STATEMENTS AND THE STATEMENT OF ACTIVITIES

The “net change in fund balances” for Governmental funds $49,977 remained the same as the “changein net assets” for governmental activities reported in the Statement of Activities as there were no long-term assets or liabilities for the Library. The differences would arise primarily from the long-termeconomic focus of the statement of activities versus the current financial resources focus of theGeneral fund. The effect of the difference is illustrated below:

General Statement of

Fund Eliminations 1 Net Assets

EXPENDITURES/EXPENSES:Administration and operations 46,261$ 46,261$

Documents and books 161,836 161,836

Equipment 22,993 22,993

Cataloging and programs 20,027 20,027

Information technology systems 32,733 32,733

City staffing agreement 886,513 886,513

Total expenditures /expense s 1,170,363 1,170,363

REVENUES

Program revenues

Contributions 1,188,843 1,188,843

Grants 10,764 10,764 Charges for services 19,154 19,154

Total program revenues 1,218,761 1,218,761

Net program expense (48,398) (48,398)

General revenue

Interest 1,579 1,579

Total general revenues 1,579 1,579 REVENUES OVER (UNDER

EXPENDITURES 49,977 CHANGE IN NET ASSETS 49,977 FUND BALANCES/NET ASSETS

Beginning of the year 470,639 470,639 End of the year 520,616$ 520,616$

Statement of Revenues, Expenditures , and Changes in

eclassifications

and

-$

-

Fund Balances/Statement of Activities

-

-

-$

-

-

-

-

-

-

-

1 Governmental funds report capital outlays as expenditures while governmental activities reportdepreciation expense to allocate those expenditures over the life of the assets. Additionally,governmental funds report compensated absences as expenditures while governmental activitiesrecognize the long-term nature as a liability, the change to contracted salaries and benefits reflects thechange in the long-term compensated absences liability from the prior year.



23

REQUIRED SUPPLEMENTARY INFORMATION



24

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Harrison Memorial LibraryRequired Supplementary Information


25

Variance

with Final Budg

Actual Positive

Original Final Amounts (Negative)

Budgetary Fund Balance, July 1, 2011 470,639$ 470,639$ 470,639$ $

Resources (inflows):

Contributions:

Carmel Public Library Foundation 280,000 280,000 280,000

Friends of Harrison Memorial Library 20,000 20,000 20,200 2

Individuals/businesses 2,130 2,1

City of Carmel - - 886,513 886,5

Grants 6,000 6,000 10,764 4,7

Interest 2,000 2,000 1,579 (42

Charges for services 22,000 22,000 19,154 2,84

Amounts available for appropriation 800,639 800,639 1,690,979 (890,34

Changes to appropriations (outflows):

Administration 57,724 57,724 46,261 11,46

Documents and books 173,369 173,369 161,836 11,53

Equipment 40,877 40,877 22,993 17,8

Information technology systems 51,085 51,085 20,027 31,0

Cataloging and programs 23,395 23,395 32,733 (9,33

City staffing agreement - - 886,513 (886,5

Total charges to appropriations 346,450 346,450 1,170,363 62,60

Budgetary Fund Balance, June 30, 2012 454,189$ 454,189$ 520,616$ (952,94$

Budgeted Amounts

For the year ended June 30, 2012General Fund

Budgetary Comparison Schedule



26

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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON

COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING

STANDARDS

We have audited the basic financial statements of the Harrison Memorial Library (Library) as of and for the year ended June 30, 2012, and have issued our report thereon dated August 30, 2013. We

conducted our audit in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial audits contained in Government Auditing Standards,

issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

Management of the Library is responsible for establishing and maintaining effective internal controlover financial reporting. In planning and performing our audit, we considered the Library’s internal

control over financial reporting as a basis for designing our auditing procedures for the purpose of

expressing our opinion on the financial statements, but not for the purpose of expressing an opinion onthe effectiveness of the Library’s internal control over financial reporting. Accordingly, we do not

express an opinion on the effectiveness of the Library’s internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent, or

detect and correct misstatements on a timely basis. A material weakness is a deficiency, or

combination of deficiencies, in internal control, such that there is a reasonable possibility that amaterial misstatement of the entity’s financial statements will not be prevented, or detected and

corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose described in

the first paragraph of this section and was not designed to identify all deficiencies in internal controlover financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We

did not identify any deficiencies in internal control over financial reporting that we consider to be

material weaknesses, as defined previously.



Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Library’s financial statements are free of

material misstatement, we performed tests of its compliance with certain provisions of laws,

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on

compliance with those provisions was not an objective of our audit, and accordingly, we do not express

such an opinion. The results of our tests disclosed no instances of noncompliance or other matters thatare required to be reported under Government Auditing Standards.

This report is intended solely for the information and use of management, the Library Council, and others within the entity, and is not intended to be and should not be used by anyone other than these

specified parties.

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February 25, 2013 JJACPA, Inc.